Is now a good time?

[Woolandwonder]

Long story short but I'm a potential ftb (but in my early 40s) Have finally managed to just about save enough for a 10% deposit and can get a mortgage on something (not something amazing but potentially a small terrace in an area we already live in and like)
The reason I'm panicking is wondering whether this is just terrible time to buy, I'm really worried about ending up in a negative equity nightmare given how much property has gone up over the past couple of years, interest rates rising, cost of living, a recession etc etc. I've had a really hard decade with loads of health issues and dealing with subsequent childlessness so don't know whether I am just seeing the worst case everywhere or whether it really is just not a good time for someone in my position to buy for the first time?

If you have secure employment go for it. Not worth risking getting priced out. Also think about the interest rates going up.

Yeah, go for it. I don’t know where you live but I doubt the prices will go down - stagnate maybe but not go down, so I doubt you’d have negative equity. If you wait, you risk them going up and the older you are, the shorter your mortgage term so do it now while you can still get a 25 year term.
At the beginning of the pandemic with so many losing their jobs, I wouldn’t have foreseen a gigantic jump in house prices over the next couple of years but that’s what happened.
Good luck!

There’s never a good time. Negative equity only affects you if you intend to move. If you plan on staying out for 10 years it will even out eventually.

I don’t think this is a question anyone can ever answer with confidence. If we knew this with certainty, we could all be millionaires.
I had a similar discussion with a financially-minded friend when I was buying my house, I suppose the key point was it depends how long you plan to live there. Maybe not wise to buy if you would sell within a short time. But you do risk getting priced out if you wait.

Thanks so much. I know you are all right and since I'd be buying a house to live in for the foreseeable future it makes sense not to get too bogged down in what might happen in terms of propertys value etc.
I think I just feel quite overwhelmed by the prospect of taking the leap and there's that fear of making a bad decision. Anyhow have a viewing booked for Saturday so I'll see how it goes (and will try and remember to ask the important questions!)

If you have secure employment I would buy a house. I know that you had a few hard years but you need to look look to your future. Long term buying a house is far better than renting and gives you more security. You don't want to be looking at rental property when you getting a pension.
Also by buying now you can take out a mortgage for 20 or 25 year's depending on your age.
I would buy a 2 bedroom place. I would consider getting a tenant to share with you. I read up the rules and tax laws regarding having a tenant. This will give you extra cash to put towards the mortgage or pay for the house upkeep.
I know a single lady who bought a house in her 30's. She rented out a room to help her cover costs. About 10 years later where she bought had gone up in value so she sold this place. She ended up buying in a better location and is now mortgage free and retired.

Thanks :) I do have a DP so am not on my own. We both have secure employment (although I can only work part time due to health stuff) You are right it is about looking forward now and I think buying a house will be part of helping me to do that.

I also say Go for it - now is not the worst time to buy as the market is slowing somewhat from the craziness of last year. It’s a long term investment so if you see something you like then go for it, but don’t be pressured into over offering on the price. Try to get it for a bit below asking unless you are in one of those parts of the country where everything goes for over asking.

It’s a long term investment. Think of it like this instead: when you pay, say, £800 a month rent, that money has gone. When you’re paying a mortgage, about £500 of that will go on the capital repayment, meaning it’s a bit like sticking it in a savings account because if you sell, you get it back (unless something very bad has happened to the housing market). It genuinely is a no-brainer and you’ll kick yourself if you get to 50 and then can’t do it because the prices have risen and you can no longer take a 20 year term. And if you live in the SE or SW, negative equity won’t be something you need to worry about, even if a big recession comes along.

Just make sure it's future proof so you won't need to move in 5 yrs etc in case there is a downturn. And I would fix my mortgage & save every month if possible for a buffer.

Try to get it for a bit below asking unless you are in one of those parts of the country where everything goes for over asking.

agree

It’s never a bad idea to put your money in bricks and mortar, imo. You need to pay to live somewhere and that money can either stay yours – every bit you repay to the bank is effectively buying more of your house’s value, the money’s not lost because you’ve got something for it. Whereas paying rent just lines some landlord’s pockets and buys a bit more of their house’s value, for them.

Cost of living at the moment is terrifying, but it’ll be hard whether you’re renting or owning. May as well own.

We bought our first house in 2007 and the market crashed in 2008. We immediately went into negative equity and regretted buying. We sold that house in 2018 with a £90k profit, so as long as you're able to sit tight and wait out market fluctuations then go for it.

If I think back to 2007, we were so nervous about whether it was the right rime to buy, and there would have been a reason every single year since then to put it off. We could have been 15 years down the line and still not owned a home if we hadnt gone for it.

I bought 3 years ago with a 5% deposit and paying at the very upper end of what people pay for flats in my area, ie pretty risky by sensible internet people standards. If I hadn't done it I'd be - to use a technical term - absolutely fucked right now. Rent goes up, catastrophically so in my area, whereas mortgage payments generally go down. My mortgage payment is now half what it would cost me to rent privately. If you can give yourself this bit of certainty, do it.

Assuming you don't see needing to move again in the next few years, yes, I would absolutely buy. I don't think prices are going to come down in any significant way in the future. We just bought our first house (also early 40s) and absolutely no regrets. We plan to stay here another 20+ years, so it is where we will live until we need to downsize to make life more manageable once we are older. Nothing is getting cheaper at the moment and our old rental (significantly smaller than the house we purchased) is now rented out for exactly what our new mortgage is.

We bought our house right at the height of the market. Things were going crazy. Within six months there was the 2008 crash.

We weren't overly worried when we fell about £80,000 into negative equity.

House had increased in value enough by the time we reached end of fixed deal and remortgaged to have an LTV a teeny bit on our favour.

Still in this house now, finally on a repayment mortgage (jumped onto that as soon as not paying nursery fees anymore) and now, 15 years later I'd say we have around £100,000 equity.

House is a bit small for two teen DCs but we'll manage. Not planning to move anyway for a very long time.

If you get somewhere you can live in for a long time, you can ride out the bottom of the market.

Also remember, it's your home.

I would say it's a very bad time to buy unless there are reasons why renting is becoming very difficult for you or other additional factors you haven't mentioned. Unless these things apply, I would wait 6 months or so and keen an eye on the market. Interest rates are rising slowly and likely to rise more, inflation is extremely higher and expected to go higher, the Ukraine situation is uncertain and we are likely to be in recession before long. Not a great time to be making the biggest purchase you have made to date.

@rainingsnoring

I would say it's a very bad time to buy unless there are reasons why renting is becoming very difficult for you or other additional factors you haven't mentioned. Unless these things apply, I would wait 6 months or so and keen an eye on the market. Interest rates are rising slowly and likely to rise more, inflation is extremely higher and expected to go higher, the Ukraine situation is uncertain and we are likely to be in recession before long. Not a great time to be making the biggest purchase you have made to date.

That’s what someone said to me in 2020 though and if I hadn’t listened, I’d be about 70k better off now!

@Constantlypanicking12- that may well have been the case but it doesn't follow that the same thing applies right now just because it did in the past. Anyone contributing on here could be entirely wrong.

[quote rainingsnoring]@Constantlypanicking12- that may well have been the case but it doesn't follow that the same thing applies right now just because it did in the past. Anyone contributing on here could be entirely wrong.[/quote]
But how long should someone wait? What if the recession (that by the way people were CONVINCED would happen at the beginning of the pandemic) doesn’t materialise? Then OP will have wasted valuable time. There’s a massive under-supply of first time but properties, meaning prices are highly unlikely to drop significantly.

I think it quite simply comes down to the question of is the interest element of the mortgage less than what you would pay in rent for a similar property in my case I’m going to buy because to rent a property would cost me £850 once and the interest element of the mortgage is £550 and that’s with me paying expensive rates you’d probably get a much better deal than I did.

So looking at cold hard mathematical figures can my deposit money earn me £300 on in the bank, no it cannot.

For the last few years with Brexit and then covid, people have been saying it’s not a good time to buy, due to an imminent crash. Houses prices have continued to rise.

Also, I presume you are currently paying rent. If you are paying £500 amount, then you are paying £6000 a year. If you so buy, and you house decreases £3000, then you are still £3000 up, compared to what you would have been paying in rent (hope that makes sense).

If you’re unlikely to move in the next few years, and have a fixed mortgage, you should be fine.

@Constantlypanicking12- you are right, no one knows for certain. Everyone including the Economists is just stating what they think is most likely, some with more knowledge to back up their opinions than others.

Hi OP, I think it's normal to have jitters before buying, especially after the few years you've had. House buying is stressful: viewings are stressful, offers are stressful, surveys are stressful and the chain is a nightmare :) but FWIW I'm early 40s and no one I know has ever lost money on property.

That includes lots of friends who, like PPs, bought right before the 2008 crash and went into major negative equity. They could afford not to sell at that point and they enjoyed their homes paying much less in mortgage than they would have to rent somewhere similar; and when they came to sell the market had bounced back and more, and they made a lot of money.

I'm not psychic so make no promises about what will happen for you! But in general if you and DH have the intention to hold onto your home and some buffer to ride out any crash that might be coming, then the advice I was given in my 20s applies:

Buy a home as soon as you can because you'll always need somewhere to live - and it's better to pay off your mortgage, than a landlord's.

Wish you the best of luck with it all. X

Thanks for everyone's thoughtful comments. It's really helpful. Obviously nobody has a crystal ball but it's helpful to get a sense from people that probably know more than me!
Yeah, currently paying £700 rent which is v cheap for the area so would be much more if we had to move. Have been here 8 years are great tenants and have a lazy landlord so it is a mutually beneficial situation.
From what people are saying I think the key is to find somewhere that I'd be happy to stay in for 10-15 years. Theres a lot of compromises I will need to make which is fine but I also need to decide what I really couldn't cope with eg no garden is a deal breaker for me but most other things I could live with.
Time is definitely ticking v quickly for the 25 year mortgage which we will need as I'm 41 and DP 42.
Have a viewing booked for tommorow but there are some potential issues with the house so need to do a bit of research and make a list of questions. Also potentially have covid so might miss the viewing anyway